tv Whatd You Miss Bloomberg October 16, 2017 3:30pm-5:00pm EDT
rose garden. mcconnell and the president pushed back at the notion they are at odds. >> we are probably now despite what we read, i think as far as i'm concerned closer than ever before. the relationship is good. we are fighting for the same thing. seizedraqi forces have an area in the battle against kurdish five soon -- fighters. it follows three weeks of rising tension since they voted in favor of statehood. ireland is being battered by the remnants of hurricane ophelia. some of the worst weather to hit the area and a half century. the irish weather service extended its most severe warning for the first time ever. a dangerous storm surge are
expected in some coastal areas. rick pitino has been fired three weeks after the school acknowledged its men's basketball program was being investigated as part of a federal corruption probe. they voted to remove the cardinals coach following a board meeting. thursday's moves in his tenure with the program that included championship013 tarnished by several embarrassing off court incidents. mumble news powered by journalists and analysts in 120 countries. this is bloomberg.
julia: live in new york, i'm julia chesley. scarlett: i'm scarlet fu. joe: i'm joe weisenthal. the question is, what did you miss? scarlett: john taylor is said to have made a favorable impression on the president who will interview janet yellen later this week. netflix, the streaming video service reported third-quarter results. will it support its skyhigh valuation? clearinghouses be a risk to financial markets? julia: the market providing another year of growth across the globe. dormant volatility, and geopolitics. ignoring. what is flying under the radar?
talk to us. what were your views on the meeting? you missed one of the most interesting meetings i've been to for a long time. everyone agreed the world economy looks good. the best in 10 years. growth apart from the u.k. is stronger now than it was before the crisis. we still have this monetary policy. the central banks have given up on the 2% for now. they are flying blind. they do have to wait for two years. they will announce tapering even know they cannot forecast 2%. joe: what was the talk of politics? there is so much discussion
about that gap between the political headlines we are seeing and the economy. they don't seem to line up well. >> a lot of people say to political. you can't run a business can you can't invest with the expectation of nuclear war. what people didn't talk enough about was the economic risk of the u.s. administration. this is a growth objective based on three real things. tax cut's, corporate deregulation and protectionism. as an economist you say that is not going to give you 3% growth. >> i wanted to follow on that idea. there has been where the trump administration will pull out of nafta completely. do you see that priced in anywhere?
>> no. i don't think. what you are seeing now, this is happening now. it feels like a lot of the economy was worried when the -- one trump got elected. he is ineffective in many ways. but now it feels like desperation is setting in. that whatevers your view on politics, it is not good governing. if you don't like obama and health care, it is not a good way to do it. nafta is an example. >> china is a classic example. we thought there was concern there would be a trade war with china and the united states. he got pulled back from the brink.
>> a lower chance he will pull back. there's almost 200 mexican trade negotiators in town. ,his issue of the component this is not good right now. this is problematic. it is not the end of the world. it doesn't mean 2% growth in america will become run. -- become 1. joe: what would it mean? what will that change from a north american perspective? >> i don't know. it is difficult to say. , recession probability models gives you 50% over the next two years. if you are messing with nafta the probability of a recession on a slow down significantly in the short term. there is nobody who thinks
protectionism is good economic policy. >> what does that mean for the other trade deals around the globe? >> i think here is the important thing. everything i heard in washington. have isest problem we america has left leadership in multilateralism. so there is no leadership. i heard from european officials saying, some thought there could be american guidance. but there is no leadership in the u.s. now. what everyone agrees on, multilateralism. happensrrespective what , they will continue to fly high.
concerns with health care, whatever it is. he said the market has been front running the central banks for a long time. now we come to a state where everything is a buying opportunity. it takes a big crisis for the big correction to happen. when that will happen, who knows? joe: everything will be fine until it is not? when the world economy is this good, so uniformly growing, history shows it doesn't unravel the market. julia: what about leadership change? is that going to matter?
>> i don't think it matters for the economy. there is no conceivable way the fed or ecb will remove the punch bowl. they are flying blind. they don't really understand. they are bound to grow slowly. >> you are referring to the unreliability of models. people thought they understood the ability to make these connections, and the idea of they don't know how it all works. >> no, you are right. flat.rst curve is we don't quite know why. nothing mentally has changed. look at germany.
comeap closes and it will fast. >> if central bankers are flying blind and this gradual remover of stimulus won't hurt isn't there a flaw in the thinking? >> i think that is right. there is a lot talked about this in washington. turnkey, these domestic issues, you look across and you can tell the spreads that are incredibly tight. it is uncomfortable. on somethingies that is not a stronger dollar. that is not inconceivable. if trump manages to do it and on, thenhe trade back
biggest risk by a mile. that comes down to the leadership vacuum we have seen. undermined the political -- it has exposed the societyit in british and in labor. i was just in london. london seem fine. people who live there were talking. it sounds like the end of the world? scarlett: london is a bubble. joe: they are the most gloomy. >> a lot of bankers have been shipped over to look at dublin. they get worried because that is a small town. there is a lot of anxiety about what the future is. people who also
watch your program, people in the financial industry. this is the population that is going to be heard. julia: you have infighting with the chancellor and -- how important is angela merkel? it's not like she can say let's push something across the line here. i feel like on the u.k. side that is a concern for them. >> the u.k. is not understood this, the 27 articles, they will not break ranks on this. possible five minutes to midnight they get together? i think that is possible but
they have to deliver the rest of the 27. veryis why you have to be pessimistic. , but ithink the logic is impossible to see the path from letter a to b. julia: how closely should we be following the shenanigans with spain in catalonia? >> i am always the most optimistic one. this is the first time we're on the bearish one. >> why? >> i can't see this settle down. it is a very big problem. article 165.er beenhe financial stuff has taken to madrid. what do you do if you trigger it?
what if the new elections give you a bigger majority for independence? knows it is a dangerous effort to take. julia: you were talking about repatriating powers. the economics lie with catalonia. >> although the companies have moved out. to stops that enough the president pushing this too far? >> he is obviously nervous and playing for time. you have to be optimistic that it ends well but it could be months of provocation. joe: is there a situation where this ends with an independent state? but ituld have to say no is not certain of anything in life.
other eu state well love them back into europe. , itf that were to happen would kill independence movement around europe. a bit like brexit. it has been the best thing for pro-european movements. they can step back and just watch the disaster unfold. >> and that is what they have done. it is recognized as a spanish issue. i think he has been playing it poorly. he should have brought of the resent. million who want independence, you can't just ignore them. constitution, move them to a republic. something.
move to meet them halfway. >> exactly. i was very surprised about that. question.t as you a this is 30 years from the crash of 1987. you hear people talk about are there things in the market or the economy that we don't see? structural things that could snap? when you survey what you see, is there anything that gives you anxiety? quite >>me bombs ticking time bombs? >> chinese debt. i have never seen levels at that number that did not end in tears. but this is sign up. they have the money. they have stopped the outflows.
difficult with china acause they think they have 3% deficit. we think it is 12. i don't think they understand. julia: what actually triggers it? they've got control of interest rates. back on. pulled what would trigger those? they are still warning about china's debt? , what triggerss it, a slowdown in growth. that will have to wait until the demographic said in. julia: what growth level? two or 3%? >> yeah. not only did the graphics but urbanization.
equity fund along with a product from blackrock and charles schwab. in least extensive products the passive investing world. germany's hello fresh saying it surpass the united states. a gain of $.19 from the previous quarter. it sustains the case and will top blue apron in the third or fourth quarter. scarlet: time now for our stock of the hour. ruby tuesday gaining 18%. i guess it cannot be that much
of the surprised it was struggling. >> you are right about that. down 25% ahead of this eye out. they have missed for the last six quarters. they closed 109 stores. the buyout is taking the company out of this. the buyout itself is not surprising. in march they open themselves to the possibility of the buyout. the stock rose. the shares are not very high. the current level, we haven't even reached. investors are just happy. this is an extraordinary chart. it shows the rise and fall of ruby tuesday. casual dining. take a look at that. a two dollars stock.
i love fridays. is there any value -- joe: is there any value in the restaurants themselves or is it all real estate? >> that is up for debate. in terms of the real estate. revamp the menu. the interesting thing about this rise and fall, so many different factors here. the millennial perspective, one reason casual dining has fallen off of the cliff, they want more creative, more healthy food. from an economic perspective the average meal at casual dining costs $14, too much for much the america. if we top back into the bloomberg and look at the shares
[applause] stocks starting milli fire and the s&p at records. copper at a high. i am julia chatterley. scarlet: i am scarlet fu. and and i am joe weisenthal welcome you to our closing bell coverage every weekday from 4:00 to 5:00 eastern. scarlet: market minute, another day of record highs for u.s. stocks. julie hyman was joking about sounding like a broken record but every day modest gains in major indexes and recognize. -- record highs. the dow up 4/10 of 1%. consistent with incremental gains. scarlet: a lot of consumer names
in focus, appropriate giving that netflix recalls -- reports earnings letter on the apple up after t bank upgraded the stocks and raisings its price target. they are overweight at keybank. nordstrom falling five and quarter percent, suspending efforts to take private after struggling to get financing with favorable terms. a sign the department store industry is not doing so well with customers and investors. sears holdings off quite 12%, bruce berkowitz, the largest outside investors stepping down from the board. pg&e, the california-based .tility, down more than 7% the wildfires a big concern and california probing a possible role live utility in the deadly wildfire. mayrts that downed wires have been a trigger for the wildfires. julia: pg&e -- joe: let's look at the
government bond market. starting in north america. up 2.3%.ields higher, a few different possible factors. that shelen saying still thinks inflation is going to come back one day. hope springs eternal. continuing anxiety about mexico .nd nafta sending yields higher five-year yields up to 7.13%. interesting charts we do not look at often. this is venezuela. the oil company concerns over the weekend over the legitimacy of regional elections and concerns over more sanctions on the country. incredibly distressed that most things in this country -- like most things in the country and the bonds of hell that and made payment but some weakness on the concerns.
iraqi bonds. i do not think we have ever talked about them. 2028 euro bonds. tensions with the kurdistan region in the wake of the independence about. some disputed oil regions sending yields higher. scarlet: paul sweeney is making a strange face. he has never seen iraqi bonds chart. julia: let's take you to dollar mexico. a year to date chart, the headlines around these nafta negotiations, the peso falling to its weakest level since may. i have a chart to give you a sense of what is going on in terms of the broader em currencies base at where mexico fits. is the worst performer among emerging-market currencies against the greenback. that is the monthly performance. balance, thee
united states the man's and where we are headed into the fifth round of talks that will begin in mexico city in the first week of november. a couple more i want to point the naftaada with talks, on the back foot today the banks of canada governors saying growth will moderate -- after hikes we saw this year and oil rising to a two-week high. sterling off by 3/10 of 1%. on commodities, let's run through them real quickly. oil gaining a bit, though off its early highs in part because of tensions in iraq. gold selling off on some of these hawkish noises coming out of the fed. copper futures with a nice day, optimism about growth in china is one possible contributor, 3.4%.
a one-year chart of latium, the very precious metal, palladium -- at one point over $1000 per tear, this is an absolute because of its use in certain vehicles and technical purposes. doing very nicely. those are today's market minute. scarlet: netflix reporting earnings on time, the numbers that matter are the subscriber additions, for the domestic net since -- streaming, 850,000, analysts looking for 774,000. on the international side, also better than expected, 4.5 million people for the third quarter and analyst looking for 3.7 2 million people. netflix is a fourth quarter at of 6.3 million, pretty much in line with analysts were looking for. 6.2 9 million. that infourth quarter,
an expected conditions for domestic and international and for the fourth quarter, we do not have a breakout for a messy versus international, in line. julia: stop selling off a little stocksstocks -- joe: selling off a little bit, speaking to expectations, a crushed the third quarter and the next merely matched expectations. scarlet: the topline numbers, not that it matters, revenue for third quarter $2.99 billion, analysts were looking for $2.97 billion/ . paul, shot with stellar numbers as far as net adds. >> as we talked about every quarter, a company that is a momentum stocks and momentum tied to the subscriber numbers, not necessarily revenue or eps.
international subscribers is where the growth has come over the last several quarters and it is where it will come over the next several years. i see strong international subscriber growth is the key metric. subscriber costs increase. >> a cautious view any fourth quarter associated with turn, the fact that they did not raise guidance or the full-year, suggesting that a fourth quarter may come below the street. scarlet: i am a subscriber and did not realize they raised prices. they are pretty good about being able to pass on pricing. >> they learned how not to do it, to surprise the market. they have condition of their consumer base to one dollar per year or two and other offerings in the marketplace from sling and hulu who have centered
around this $10, $12, $13 per price point and this company has every year premise raise prices. scarlet: stocks settled on a direction, higher in after-hours trading but still modest historically been joe: we talk about revenue numbers and treats the financials as an afterthought. the cash flow burn is still gigantic. that 2.5 our preview billion negative cash flow losses. as long as they are growing like crazy, market seem to tolerate it. did they have to turn that around at some point? >> i think they do, if there is , fair case, up 60% this year the bear case would set on the fact that they are cash flow negative. they lost $1.6 billion last year. if you look at the bloomberg terminal, it does not show consensus numbers out of wall
street to be cash flow positive until 2021. how are they finding the $7 billion per year in programming spent? going to the bond market but they can only do that for so long. the bull case is, as they continued to as subscribers and drive revenue and profits, that will drive free cash flow to fund the huge investments we are seeing and programming. julia: we look at the programming on a quarterly basis, 13 reasons why, unbreakable kimmy schmidt, house of cards, a draw for the quarter. this quarter with the focus as well. at what point do they step back and say, given the subscriber growth, we do not need to worry about it on a quarterly basis about announcements and ease off of it? >> they tried to suggest to the marketplace a quarter or so ago, let's reduce focus on that subscribers, already over 100 million and focus on profitability. they said that when the u.s. business have finally became significantly profitable.
and when they had good visibility that their international business were approaching break evening -- break even. they are trying to change the narrative to the growing probability. every time that profitability. -- profitability. scarlet: they are paying for the programming by bonds which leaves it vulnerable and credit analysts follow netflix, what do they look at versus equity analysts. are they fixated on subscriber numbers or looking at things deeper? >> they look at the contribution margin from the u.s. business and international business. what the bond market takes comfort in -- u.s. business has established itself as a very profitable business and profit margins and genuine, they take the international business, which will be a bigger business ultimately, and extrapolate some profit numbers we have seen in the u.s. business, that is what will fund the bonds. tail, thethe long library netflix is building,
create value? are people watching early shows or do they have to have a hit right now? julia: disney, in addition to that, what does the loss of busy mean? mean?could be -- disney >> it could be big in a couple of years. they have placed their bets on their own original content, that is a function of, they think it is better for them and their suppliers like disney are restricting the amount of programming they are taking to netflix. 30% of all netflix spending, $7 billion, on original, 50% next year or the year after an even higher. they are spending huge amounts on originally scripted programming and a lot of a list stars and directors are going to amazon because the checkbook is there and that is where the future seems to be. scarlet: any the future, animated children's version of "house of cards."
♪ >> i am mark crumpton and it is time for first word news. working lunch with mitch mcconnell, president trump told reporters at the white house that he and congress are fighting for the same goals of lowering taxes and tax reform. president trump: we have been working together long and hard and are in good shape for the budget, we hope and we hope to be in good shape with the largest tax cuts ever passed in
this country. u.s.e president says the needs to cut its 35% corporate tax rate to become more competitive with countries like china whose tax rate is 18%. -- 15%. the president will ask allies to pressure north korea on its nuclear program when he travels to the asia-pacific region next month. the president will visit japan, south korea, china, vietnam, and the philippines in november. in south korea, the white house says all to will meet with their president and call on the international community to join together in maximizing pressure on north korea. has newpean union sanctions on north korea for developing nuclear weapons and ballistic missiles. the sanctions agreed by eu foreign ministers today include a total ban on eu investment in north korea and a ban on the sale of refined petroleum products and crude oil. the measures aimed at income
supporting the nation's nuclear and ballistic missile program. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪ julia: gary cohn warning that clearinghouses could present a major systemic risk. he said that today the banking conference in chicago. >> we had not really figured out how to resolve a clearinghouse in the clearinghouse -- andy clearinghouse -- 278 trillion dollars of interest rate derivatives and it. -- in it. staggering numbers. anya: he said that like great modern invention, clearinghouses have their limits joining us with his perspective is bart chilton the former commission of the commodities -- great to have you here and thank you for joining us.
he is not the only person to warn about this, blackrock, jpmorgan have been warning about the concentration of risk in the clearinghouses for some time. are they right, is this a future systemic risk? >> i do not think so. you have to remember that some of the large banks prefer to take on this risk themselves. they do not want their margin held over in a clearinghouse. that did not work out too well in 2008. if we look at the history of these clearinghouses, particularly in the derivatives area, that he was talking about, we did not have one single failure of a company because of their trading and the clearing positions. it was the regulated market -- the derivatives markets, that we oversaw that worked pretty well, given the horrible calamity we were in. i think he has a point, but the
only point is that, maybe we should continue to look at this. all of these regulations need to be living and breathing things that you look at going forward. scarlet: five you think he is sounding the alarm now when there has been a steady risk on mood and asset prices have been slowly melting higher? , and icynical thing think he is doing a really good job, a little head on my cynical that one oft, he is these conferences and has to come up with something. he is thinking about maybe being the fetch so let's talk about systemic risk. , so let's talkr about systemic risk. we had a higher margin requirement that others around the world at our clearinghouses. they are doing a good job and are holding $3 billion, $4 billion, $5 billion per day in risk. , they callse tests
them resolution and recovery tests, they are required by my former agency to keep those up to date every single day. .hose are important tests they are like the stress tests they do for the systemically important financial institutions under the fed. it is key that those continue, but nobody is talking about those. those.ing about by and large, they have worked out pretty well. not sure if he has it right on the point. about systemic risk is a nice way to sound sophisticated in the theoretical , when you look at the financial landscape, are there any places that concern you right now in terms of build up of risks and leverage we may not be seen -- seeing? >> i should probably be asking you, i think there are two areas. i think there is some bubble
speculation. if we go back, 30 years ago today was black monday. look what happened in the economy back then -- look what was happening, things were going pretty well but the markets were outpacing the economy. the economy had slowed a little bit and we saw a little bit of a bubble. if you look at what markets are doing now, they have reached these 50 highs this year. i think that, what is it based upon? the hope and promise of tax reform this year? i do not know. the secondary is digital currencies, which i fully support and think it is a great thing. bitcoin, oh my fraudnot saying it is a 15 -- or a pyramid scheme.
i put in a book, if it sounds too good to be true, it is. look at these investments. to see the volatility and get going, i am concerned that in bitcoin, i am concerned some people will take a hit. there is a long-term good thing about visual currency and that somebody would get it right but i do not think it is going -- bitcoin at this point. joe: if you have a bloomberg terminal, you should check out tv . you can watch us online and click on the charts, graphics, interact with us directly. here we are earlier talking to eric nielsen -- erik nielsen. you can send in a complaint. scarlet: are you encouraging people to complain? joe: nobody ever complains. this is bloomberg. ♪
♪ scarlet: i am scarlet fu. the threat of nuclear war, hurricanes, russian meddling, it seems nothing can unnerve investors and pushing the u.s. stock market higher in two new records. we know that since the financial the s&p 500 is the white line and you can see since 2009, up and away and the blue bar is the number of times the phrase buy the dip was mentioned in the media. common in 2002. around the time that we got to 2004-2008 it quieted down. 2009 it went up and
prominent from 2015 through this year. now back at levels we last saw in 2002. nothing seems to stop this going up and equity prices and there is a fear of missing out. joe: my favorite chart in a long time, perfect about the mentality. here is why everyone feel so confident in the dip. the market does not go to you every time over the last several years going back to 2007 of a 2% decline, every blue line is a day that the s&p fell at least 2% in a day. we used to get them a fair amount. into prices, in 2011 we had one and more and more spaced out. last year we just had a couple and this year not a single one. since the middle of last year we had a 2% dip. it speaks for itself. the market does not dip. julia: my chart shows the
results and whether talking about the white line, bitcoin, the blue line, bart chilton called it bubblicious. year to date in terms of the performance, the yellow light is the russell 2000, we see this rally. a point was made by credit thate analyst, saying since brexit, the market mentality has changed and what we saw then was $2.5 trillion of value wiped off the markets in three days. they was a suddenly bounce. everyone who sold looked and felt stupid. whatever the headline is, however concerning, people get over it and rather worrying about risks that could see the markets come down, investors are looking through them and looking for reasons to rally. joe: love the point about brexit, how gloomy people got for one week and realizing that
it did not matter, then what else would matter? julia: how do you price these risks? on. you cannot, you carry scarlet: you ignore it. not a factor in your decision-making until it has to be. coming up, president trump and mitch mcconnell pledge to work together on the gop goal of overhauling federal taxes, we will have the latest and discussing that further. what can they achieve in 2017? from new york, this is bloomberg. ♪ are you on medicare?
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tier 1 and tier 2 drugs, with home delivery. don't wait, call unitedhealthcare or go online to enroll in aarp medicarecomplete. sfx: mnemonic >> it is time for first word news. senate majority leader mitch mcconnell says he and the president have the same agenda. after a working lunch at the white house, both spoke to reporters in the rose garden. mitch mcconnell and the president pushed back against the notion that they are at odds. we probablyump: are, despite what we read, as far as i am concerned, closer than ever before. the relationship is very good and we are fighting for the same thing. >> u.s. army sergeant bowe bergdahl pleaded guilty today to desertion and misbehavior before the enemy. he walked off his remote closed
in afghanistan in 2009, captured by the taliban and held for five years. the misbehavior charge carries a maximum penalty of life in prison. while a desertion charge is punishable by up to five years behind bars. a sentencing hearing will be held next week. the european union says those who commit crimes against myanmar's minority must be brought to justice, the eu foreign minister said that the block is reviewing defense cooperation over the violence and says that all credible allegations of human rights violations and abuses must be thoroughly investigated. more than 500,000 minorities have fled to bangladesh since august. as hurricane ophelia slams a side, london is seeing effect, red and orange sky. it brought in wins from africa carrying dust from the sahara and smoke from portugal's
wildfire and the haze had londoners and tourists stopping to observe and take photographs. hurricane ophelia, now a post-tropical cyclone, has killed three people in ireland. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ofrlet: let's get a recap the market action with u.s. stocks closing at another record high, the s&p gaining almost five points, the dow up by more than one third of 1%, oil and copper rising which drove commodities to a six-month high. treasuries declining. joe: let's get a quick recap of netflix earnings, which came out earlier in the hour. the stock is up 2% after the company handily beat expectations for streaming net adds.
adds, 4.5 million addressed ms. of 3.7 2 million and quarter for, estimates in line, 6.3 million versus estimates of 6.2 9 million. netflix has been on an incredible run and up nearly 2% after hours. julia: president trump and mitch mcconnell held an impromptu press conference today to project unity following reports they have a strained relationship. donald trump said he and mitch mcconnell would work on his biggest priorities, repealing obamacare and tax cuts. president trump: we are fighting for lower taxes, the biggest tax cuts in the history of our nation. we are fighting for tax reform as part of that. we are getting closer to health care and we will, in the early to mid part of next year.
we will have a vote and i think we already have the votes. we felt confident we have the votes. julia: let's bring in our washington bureau chief. what was that all about? what was the show of unity? it was awkward and i am not sure we learned anything. >> a lot of people not sure they believe it. the all caps has been a needling mitch mcconnell -- donald trump has been needling mitch mcconnell, he failed to get obamacare debt and having slow start on tax reform. he has made him one of his favorite twitter target. donald trump may realize he could end the year with no major legislative achievements. the last one on tap is tax reform and that is not looking good for 2017. it was an attempt by donald trump to bring down the talk about donald trump started that he and ms. mcconnell do not get along and show they are marking to the same grammar when it comes to cutting taxes and repealing obamacare. julia: he is realizing he needs
mitch mcconnell to get things passed, who is he sending the message of unity to? >> other members of the republican congress. he has criticized mitch mcconnell that he has not kept the caucus in line and only got a two vote margin on anything important. they could not get the two votes for obamacare and they're having trouble on tax reform. mitch mcconnell, who has been known as a wily legislative tactician and a tough arm twister when it comes to the tough votes, he has let donald trump down and i think donald trump was trying to say, mitch is my guy and you need to listen to him when he says i need the votes. joe: any sense in chemistry, body language during the press conference? did you get a feel for that or just purely words? >> it felt just like words. mitch mcconnell is chided for being lacking personality, he is not a classic politician. -- flashy politician.
of to moreto think opposite politicians than donald trump and mitch mcconnell. donald trump is the manhattan real estate millionaire and mitch mcconnell is a lifer in the senate. i am not sure you will have warm feelings but they do both want to cut taxes and repeal obamacare. there is a lot they seek my to eye on but they have been trouble holding the caucus in line and donald trump thought i need to give a hug to mitch mcconnell and not just a slap. scarlet: to be a fly on the wall during their lunch. mike pence was also reportedly at the lunch. he plays a critical role as a conduit between the white house and congress. how much of a role is he playing do you think an making sure tax reform gets addressed, health care is not completely off the table? was in the house of representatives and a well-respected guy in
washington. he's facing language of congress and away donald trump does not. donald trump sees congress as in his way. in getting things done he wants to get done. he thinks a strong executive is his prerogative. he has been frustrated at how congress moves slowly on things. the house,hrough mike pence knows the people and has relationships. when mike pence talks, they listen and when donald trump tweets, they do not listen. mike pence could be useful to donald trump in that way and that is why he is at the lunch and on the hill on what trying to carry the agenda. julia: rumors of a further reshuffle and rex tillerson leaving will not die. senator tom cotton in focus potentially stepping in as the , what can you tell us about that and the rumors swirling around washington dc at the moment. >> rumors about rex tillerson leaving the job until he leaves. he gave a definitive talk last week and said i'm not going
anywhere and as far as i know not getting fired and if the media thinks they can run me off, i am staying. rex tillerson genuflect it at the altar. we know he is on his way on a trip this week. he will be in asia when donald trump takes his major trip through asia for the apec summit. i think the rumors of rex tillerson's demise are premature, you hitting them tom cotton, mike pompeo, washington luz the name game -- luz the gamegame -- loves the name , i think rex tillerson will be here through the end of the year and probably longer. scarlet: a question on the president and who will be the next fed chief. he met and was impressed with john taylor and will interview janet yellen. this will be an official interview we believe?
>> that is our understanding. we have reported exclusively that the list was five people. janet yellen being one of the five. many sources said she was a little bit on the list as a courtesy and to make sure the market did not freak out that he would do a big change with janet yellen. reporting that she is not a serious candidate as other people. interview and the a courtesy i would argue she deserves as the current occupant of the job. we have been suggested that it has been suggested to us that she is not a top-tier candidate by donald trump changes his mind many times and he could change his mind walking to the podium that they and he is as much in the mix as she ever was. .carlet: thank you so much coming up, bit going with another record high, around $6,000 price mark, whether
scarlet: the crypto craze reaching new highs as bitcoin fit another race -- record high, pushing toward $6,000 despite wall street naysayers, jamie dimon, anyone? what is behind the rally at is it here to stay? we are joined by nolan bauerle. do you see bitcoin as a risky asset or a safe haven? >>. focusing on the price but the underlying problems is solved, important problems. willat equifax, bitcoin react to that, solving problems with cryptography and cryptography moving to the
individual, a much bigger story. joe: how cryptography would be of help in the equifax and other privacy measures, bitcoin, what is the connection? >> cryptography is a weird science, involving much more than just -- we shared this information with banks that are doing authentication for us. we have shared our mother's maiden name and our dogs name. we have shared it with salesman who wants to give us the word points and home hardware. the same day the banks have lost billions of dollars securing this. bitcoin spends not a dollar. people come to provide security to the network. joe: it sounds like what you are saying is the argument with people dismissed, the underlying technology more than the coin is interesting. >> there is not really a going to begin with. we are talking about cryptographic keys that movement
rate which has unlocked a new type of economic force, crypto economics. you have all these computers that have branched into the network and are providing security, and making money off of this. all kinds of jobs we will see in other industries. transactions that are particular and for one particular industry. julia: a shocking lack of education and understanding about this, we focus on bitcoin, jamie dimon calls it a fraud. you are talking about security benefits, others in the packing cases, the fact they were trying to pay in bitcoin was part of the problem. the identity is protected. >> you have people exposing a current -- and -- you ask third parties to do it in the mirror internet and of a third party, the moment you share your personal data with another secure -- in a secure
transaction has opened up the hack factor and all of this stuff is out there. our social security numbers are gone. , everyone dimon talking about his comments, although he called it a fraud, he said bitcoin was i able, if you are a drug dealer, murderer, trying to get money out of that was valuable if you are a drug dealer, murderer, trying to get murder -- money out of -- >> you could do the same things with cash. joe: not online. >> the digital revolution gave us two problems, who are you and can you do what you are trying to do what you want to do? authentication and authorization. authentication has been solved with possession of the key in your own hands. a fundamental shift in cryptography. the other is authorization. there are ways to calibrate
these transactions, although it has been good for money laundering, some people have done very well. it is a way to hedge against monetary policies from certain government. and a way to allow us to transact over orders. we are creating a jurisdiction, the legal concept of jurisdiction is under stress because of this technology, the idea of a jurisdiction. it has to adapt. we have had difficulty in adapting it. there will be new innovation in bitcoin, just like the internet. this is a way to recalibrate and reorg is great how we use the internet. scarlet: we have to think of a whole new structure, you are not -- the irs is taxing people from the income they make. how do you expect regulation to play a role in the story? how will it come to fruition? julia: will bitcoin accelerate the focus? >> i see this as a challenge for
regulators. it is hard for regular's -- what we saw with the fcc, they put out a sophisticated guidance on securities themselves, and whether they are for utility or how -- launching securities in an unregulated way. , thisna, right now compliance they are signaling they want will be difficult to achieve. really difficult. going further than that, when we talk about authentication and authorization, that is what regulators do, they want a transaction to go a certain way which makes it a valid transaction. bitcoin has a way that validates a transaction, a track record that has been wonderful. regulators will adapt to this technology. the types of transactions they want will be into the technology and the platform, you will see governments move towards this for their own purposes. julia: great to have you. we will have a black dust back
julia: former defense secretary leon panetta wants congress to permanently protect the so-called dreamers. he is part of a bipartisan group called the green coalition's members include the apple ceo and chicago mayor. and the harvard president. secretary panetta: spoke about the effort earlier today. secretary panetta: there is strong bipartisan support for fixing this program.
and being able to provide the protections that were promised to almost 800,000 children of immigrants. i think there is a strong coalition. both in the house and the senate, in support of the dream act. lindsey graham and others on the senate side have supported the dream act to protect these individuals. i think we have a pretty good chance on both sides with the cooperation of the president and the administration. i think we will get this done, hopefully before the end of the year. the leaky border issue, the broader issue as far as immigration reform, do you think dreamers should be dealt with as part of a broader package on immigration reform, or dealt with separately? scarlet fu it would be --secretary panetta: it would be nice if they were dealt with separately because they were promised protection. i understand washington and the
politics of the hill. involve of this has to enforcement strengthening along the border, i think that should be something that could be part of a package. let's be frank, what we are looking at is some kind of passing, some sort of continuing resolution in september. there will be a lot of pieces to that package. one of which i hope is the dream act. in addition, there may be funding for the enforcement side as well. if we can do that, in that kind of broad package, i think we can get broad that's bipartisan support for the ability to protect these kids. scarlet: iran needs partisan support and what to do with the country. president trump would not recertify the iran deal, he is sick of being taken advantage of as a nation he said.
what could be improved upon in the current iran nuclear deal? what are areas that should be tossed aside and regan, versus just redone, versus what -- versus whatdone, should be preserved? secretary panetta: concerns for iran's support for terrorism and the missile program. concerns about what they do to promote instability in the region. at the same time, we have established an agreement that doesn't prevent them from getting a nuclear weapon at least in the short term. that is something that should be protected. the real issue is, how do we engage in negotiations with iran to deal with these other concerns? the better approach is to continue to enforce the nuclear agreement that was arrived at and work with our allies, who work with us on that agreement to have them work with us to get iran to begin negotiations on these other issues.
i do not think there is a way to simply carry up the agreement -- tear up the agreement at think iran will negotiate when they question our credibility. it is better to project our credibility -- protect our credit -- credit ability and in negotiate -- credibility and then to go shake -- negotiate. this congress does not have a very good record at getting much done, whether on health care or on other issues. this will not be easy. normally it is the commander-in-chief who dictates what should happen with regards to foreign policy. to throw the ball at the congress raises a lot of questions. i hope they can do something. what they are working on is some kind of effort to try to strengthen enforcement on the deal. that may make sense, along with applying sanctions, if iran does not abide by the terms of the
agreement. julia: that was leon panetta earlier on bloomberg markets. scarlet: let's get you to the bloomberg business flash. the supreme court will not consider reviving allegations that american express stifled competition by blocking merchants from the steering customers to cards with lower fees. an appeals court swept the lawsuit and it offers hope you retailers try to reduce $50 billion paid to credit car companies each year. discover has complained that the world undercut its ability to compete. lufthansa moving ahead with its european expansion and try to the up a sales rival, german biggest airliner has expressed interest and an insolvent italian carrier and european and domestic point-to-point businesses. they agreed to take over our berlin's major operation after they filed for insolvency a few weeks ago. that is your business flash
domestic and international subscriber additions better than expected. joe: tomorrow, inflation data out of the u.k. and the eurozone. hey attention to both numbers. julia: i will look at the greek prime minister, meeting present cap at the white house -- president trump at the white house. joe: morning -- scarlet: four earnings from ibm, johnson & johnson, and others. julia: bloomberg technology is next. joe: have a great evening, this is bloomberg. ♪
trump "have the same agenda." both men agreed to speak to reporters in the rose garden. mcconnell pushed back on the notion he and the president are at odds. president trump will ask u.s. allies to pressure north korea on its nuclear program when he travels to the asia-pacific next month. he will visit japan, south korea, china, vietnam, and the philippines in november. he will also meet with president moon jockeying best president -- with president moon in korea. althoughighters say the dangers from the most destructive blazes in california's history is far from over, color winds are helping make the progress.com or winds -- -- kolmar winds -- kolma calmer winds are helping make progress.